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I don't know what Uber thinks its end game is. Uber's "lets burn money to capture the market and own self driving" stratagem is economically absurd. In the limi

I don't know what Uber thinks its end game is. Uber's "lets burn money to capture the market and own self driving" stratagem is economically absurd. In the limit of driverless cars, capital can be turned directly into labor so anyone with capital will deploy a fleet so long as it is profitable. Talk about a red ocean. The self-driving dream investors pin their hopes on is a siren. Ironically, Uber will only be able to maintain value in those futures where driverless cars don't work out. Commodities do not have network effects. In general, if you are replacing labor with capital (in the form of automation) you will not get the network effects of a two-sided market - which is basically a market failure caused by our previous inability to convert capital into labor in a manner that scales. If you are replacing a two-sided market with automation you are going to need another moat.

JumpCrisscross 7y ago
> I don't know what Uber thinks its end game is There is a massive, profitable courier business in most cities that Uber hasn't touched. And food delivery is already being explored. Beyond that, Uber's electronic-dispatch technology has the ability to optimize garbage pick-up and drop-off; police, fire and medical resource routing; small-vehicle fleet management for sundry specialized logistics companies; and all manner of other logistical processes presently centrally dispatched like taxis were a decade ago. Uber is burning too much cash. But real-time electronic dispatch of variously-placed resources to randomly-distributed tasks is nothing to sneeze at. It's a difficult problem due to its myriad of edge cases, and Uber seems to have reasonably solved it.
- spac 7y ago
  For a while, in NYC at least, they tried the courier model, but that was a few years ago. Not really sure why it did not continue.
  - JumpCrisscross 7y ago
    > For a while, in NYC at least, they tried the courier model, but that was a few years ago Courier services are high-risk operations sensitive to reliability. My guess is Uber's network wasn't optimized for reliability then. Food delivery has similar reliability requirements, but the stakes are lower. (Failed food deliveries produce complaints. Failed courier runs produce litigation.)
- untog 7y ago
  > Beyond that, Uber's electronic-dispatch technology has the ability to optimize garbage pick-up and drop-off; police, fire and medical resource routing; small-vehicle fleet management for sundry specialized logistics companies; and all manner of other logistical processes presently centrally dispatched like taxis were a decade ago. But why is it going to be Uber providing those services? What's their moat? Google has an absurd amount of live data from shivers using Google Maps or Waze as they drive around a city, if they launch a "medical resource routing" service tomorrow it'll blow Uber out of the water.
  - JumpCrisscross 7y ago
    > What's their moat? They’re actually doing it. At scale, practically everywhere. > if [Google] launch a "medical resource routing" service tomorrow it'll blow Uber out of the water I’m doubtful. One, it’s Google. Logistics requires lots of customer interaction. Uber isn’t great at this, but it’s better than Google. Also, being able to theoretically do something is different from actually doing it. The problem isn’t routing. It’s knowing which tasks to bundle in what order. It’s knowing where tasks which haven’t been ordered yet are likely to emerge. It’s knowing how long a task might take. It’s knowing which tasks require what, and who is best placed to accept it. It’s mediating disputes between the various parties involved, and properly incentivising them.
    - untog 7y ago
      > One, it’s Google. Logistics requires lots of customer interaction. Uber isn’t great at this, but it’s better than Google. That's usually said when talking about Google's free services. In my experience when you're paying them money they're very responsive. And I'm still not sure what makes Uber's tech all that notable. They simply have more drivers than their competitors do, it stands to reason the customer experience is better.
      - JumpCrisscross 7y ago
        > In my experience when you're paying them money they're very responsive In my experience, they're 50/50. They're also totally unreliable as a commercial partner. You don't want to outsource your logistics to Google only to learn about the service being cancelled in a press release.
- deleted 7y ago
  [deleted]
sowbug 7y ago
Which history are we seeing all over again? Amazon in 1997 losing money selling $5 books for $4, or pets.com losing money selling $50 bags of kibble for $40?
- shaklee3 7y ago
  Except most of Amazon's money is made off AWS, and not retail. Amazon today would be very different if AWS didn't exist.
  - sowbug 7y ago
    Yes, that was the point of the question: whether today's Uber is the first chapter of a larger plan to build a profitable business on top of a much simpler and possibly even inherently money-losing set of transactions, or whether it's already in its final form and is just a bad idea.
tootie 7y ago
The success of Lyft just shows how little moat they have. The core of their business is so simple and so easy to copycat.
threeseed 7y ago
Driverless cars are a very long way away. And even longer for Uber style use cases where you need to either be able to read street signs or know the parking rules in every street around the world. Not to mention that Uber drivers rely on breaking the law eg. Stopping in non stopping areas like bus lanes. Self driving cars going to do that ? And confused how the economics are so better for self driving cars given that they are likely to be far more expensive.
- xmprt 7y ago
  I'm also super confused about how the first company to develop self driving cars will win everything. Firstly, it's hard to say when a car is truly self driving and even once regulators say it passes the tests, I'm sure companies will continue investing money into improving the experience so R&D isn't going to get any cheaper. Also, self driving cars cost a ton to operate and manufacture. Probably more than the amount Uber and Lyft are paying drivers right now. Considering all these factors, it probably won't be another 10 years until the economics of driverless cars works out. In this sense, I think Uber's biggest competitor isn't Lyft or Waymo. It's Tesla since Uber is trying to shift people away from car ownership.
jessedhillon 7y ago
I'm constantly amazed at the number of upvoted, top-level comments on HN (on any topic) where the underlying premise is first, thousands of people with actual skin in this game are wrong, whereas I, a drive-by commentator, posess True Understanding. I'm not suggesting that a large number of personally invested people is proof of correctness -- but certainly it reeks of arrogance if your argument assumes without proof that an uninterested commentator is better informed than all of them. More so if your only comment, given such a grand assumption, is to reiterate basic economics. At least you could try to explain how you think it is that so many are mistaken about something so elementary that it fits in two short paragraphs.
- mhermher 7y ago
  Those investors just need to find greater fools.
- GVIrish 7y ago
  Investors have been massively wrong before on all kinds of things which has led to market crashes. So the fact that some investors believe Uber will become a strong, profitable business in the foreseeable future doesn't count for much. The market is not perfectly rational. It's vulnerable to hype and there's a lot of money to be made by exploiting that hype and selling before the bubble bursts.

JumpCrisscross 7y ago

> I don't know what Uber thinks its end game is There is a massive, profitable courier business in most cities that Uber hasn't touched. And food delivery is already being explored. Beyond that, Uber's electronic-dispatch technology has the ability to optimize garbage pick-up and drop-off; police, fire and medical resource routing; small-vehicle fleet management for sundry specialized logistics companies; and all manner of other logistical processes presently centrally dispatched like taxis were a decade ago. Uber is burning too much cash. But real-time electronic dispatch of variously-placed resources to randomly-distributed tasks is nothing to sneeze at. It's a difficult problem due to its myriad of edge cases, and Uber seems to have reasonably solved it.

spac 7y ago
For a while, in NYC at least, they tried the courier model, but that was a few years ago. Not really sure why it did not continue.
- JumpCrisscross 7y ago
  > For a while, in NYC at least, they tried the courier model, but that was a few years ago Courier services are high-risk operations sensitive to reliability. My guess is Uber's network wasn't optimized for reliability then. Food delivery has similar reliability requirements, but the stakes are lower. (Failed food deliveries produce complaints. Failed courier runs produce litigation.)
untog 7y ago
> Beyond that, Uber's electronic-dispatch technology has the ability to optimize garbage pick-up and drop-off; police, fire and medical resource routing; small-vehicle fleet management for sundry specialized logistics companies; and all manner of other logistical processes presently centrally dispatched like taxis were a decade ago. But why is it going to be Uber providing those services? What's their moat? Google has an absurd amount of live data from shivers using Google Maps or Waze as they drive around a city, if they launch a "medical resource routing" service tomorrow it'll blow Uber out of the water.
- JumpCrisscross 7y ago
  > What's their moat? They’re actually doing it. At scale, practically everywhere. > if [Google] launch a "medical resource routing" service tomorrow it'll blow Uber out of the water I’m doubtful. One, it’s Google. Logistics requires lots of customer interaction. Uber isn’t great at this, but it’s better than Google. Also, being able to theoretically do something is different from actually doing it. The problem isn’t routing. It’s knowing which tasks to bundle in what order. It’s knowing where tasks which haven’t been ordered yet are likely to emerge. It’s knowing how long a task might take. It’s knowing which tasks require what, and who is best placed to accept it. It’s mediating disputes between the various parties involved, and properly incentivising them.
  - untog 7y ago
    > One, it’s Google. Logistics requires lots of customer interaction. Uber isn’t great at this, but it’s better than Google. That's usually said when talking about Google's free services. In my experience when you're paying them money they're very responsive. And I'm still not sure what makes Uber's tech all that notable. They simply have more drivers than their competitors do, it stands to reason the customer experience is better.
    - JumpCrisscross 7y ago
      > In my experience when you're paying them money they're very responsive In my experience, they're 50/50. They're also totally unreliable as a commercial partner. You don't want to outsource your logistics to Google only to learn about the service being cancelled in a press release.
deleted 7y ago
[deleted]

sowbug 7y ago

Which history are we seeing all over again? Amazon in 1997 losing money selling $5 books for $4, or pets.com losing money selling $50 bags of kibble for $40?

shaklee3 7y ago
Except most of Amazon's money is made off AWS, and not retail. Amazon today would be very different if AWS didn't exist.
- sowbug 7y ago
  Yes, that was the point of the question: whether today's Uber is the first chapter of a larger plan to build a profitable business on top of a much simpler and possibly even inherently money-losing set of transactions, or whether it's already in its final form and is just a bad idea.

tootie 7y ago

The success of Lyft just shows how little moat they have. The core of their business is so simple and so easy to copycat.

threeseed 7y ago

Driverless cars are a very long way away. And even longer for Uber style use cases where you need to either be able to read street signs or know the parking rules in every street around the world. Not to mention that Uber drivers rely on breaking the law eg. Stopping in non stopping areas like bus lanes. Self driving cars going to do that ? And confused how the economics are so better for self driving cars given that they are likely to be far more expensive.

xmprt 7y ago
I'm also super confused about how the first company to develop self driving cars will win everything. Firstly, it's hard to say when a car is truly self driving and even once regulators say it passes the tests, I'm sure companies will continue investing money into improving the experience so R&D isn't going to get any cheaper. Also, self driving cars cost a ton to operate and manufacture. Probably more than the amount Uber and Lyft are paying drivers right now. Considering all these factors, it probably won't be another 10 years until the economics of driverless cars works out. In this sense, I think Uber's biggest competitor isn't Lyft or Waymo. It's Tesla since Uber is trying to shift people away from car ownership.

jessedhillon 7y ago

I'm constantly amazed at the number of upvoted, top-level comments on HN (on any topic) where the underlying premise is first, thousands of people with actual skin in this game are wrong, whereas I, a drive-by commentator, posess True Understanding. I'm not suggesting that a large number of personally invested people is proof of correctness -- but certainly it reeks of arrogance if your argument assumes without proof that an uninterested commentator is better informed than all of them. More so if your only comment, given such a grand assumption, is to reiterate basic economics. At least you could try to explain how you think it is that so many are mistaken about something so elementary that it fits in two short paragraphs.

mhermher 7y ago
Those investors just need to find greater fools.
GVIrish 7y ago
Investors have been massively wrong before on all kinds of things which has led to market crashes. So the fact that some investors believe Uber will become a strong, profitable business in the foreseeable future doesn't count for much. The market is not perfectly rational. It's vulnerable to hype and there's a lot of money to be made by exploiting that hype and selling before the bubble bursts.